Professional and Institutional Development Sector

Professional Development Office

Commonwealth Avenue, Quezon City
Introduction to Audit of Government
Expenditures

Session 1.1: Introduction to AGE 1.1-2

 Legal Basis of an Auditor to Audit

It is our constitutional mandate to examine, audit and

settle all accounts pertaining to the:
• revenue and receipts of,
• and expenditures or uses of funds and property,
owned or held in trust by,
• or pertaining to the government,
• or any of its subdivisions, agencies, or
instrumentalities.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-3

 Section 2 PD 1445

“It is a declared policy of the state that all

resources of the government shall be managed,
expended or utilized in accordance with laws
and regulations and safeguard against loss or
wastage through illegal or improper disposition
with the end in view to ensuring efficiency,
economy and effectiveness in the operation of
the government.”

Session 1.1: Introduction to Audit of Government Expenditures 1.1-4

 Basic Concepts
Allotment – An authorization issued by the DBM to NGAs to
incur obligations. Also called obligational authority

Appropriation – The authorization made by a legislative

body to allocate funds for purposes specified by the
legislative or similar authority. (Sec 2 Chapter 3 GAM).

Approved Budget – The expenditure authority derived from

appropriation laws, government ordinances, and other
decisions related to the anticipated revenue or receipts for
the budgetary period.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-5

 Basic Concepts
Expenses – Is a term used for a financial transaction or
event that would result to a decrease in assets, example
paying the expenses through cash, or an increase in
liabilities, such procurement on account, with the
corresponding decrease in equity.

Obligation – An act of a duly authorized official which

binds the government to the payment of money. It is a
commitment to future liability

Session 1.1: Introduction to Audit of Government Expenditures 1.1-6

Budget Cycle/Process
Budget
Preparation

Budget Budget
Accountability Review

Budget Budget
Execution Authorization

Session 1.1: Introduction to Audit of Government Expenditures 1.1-7

 Budget

Respective Agency through the Budget

Officers of NGAs and GOCCs and Local
Finance Committee of LGUs

Session 1.1: Introduction to Audit of Government Expenditures 1.1-8

 Budget

NGAs – DBM/LOWER and UPPER HOUSE

(Congress)

LGUs – Province. Highly Urbanized City – DBM;

Municipalities and Component Cities –
Sangguniang Panlalawigan;
Barangays – Sanguniang Bayan/Panglunsod

Session 1.1: Introduction to Audit of Government Expenditures 1.1-9

 Budget
Involves the release and actual disbursements of funds

Session 1.1: Introduction to Audit of Government Expenditures 1.1-10

 Budget
This phase involves the release and actual disbursement
of funds for the identified functions – Work and Financial
Plan and Request for allotment.

WORK PLAN FINANCIAL PLAN

Basis for programming Provides funding support for
finances under the the work and becomes the
financial plan and basis for allotment.
request for allotment.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-11

 Budget

Involves the rendition of

accounts; submission of
reports and documents
to COA; auditorial
visitation; accounting for
revenue and obligation
and general liability for
unlawful expenditures.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-12

 Budget of GOCCs

For Corporate Government Sector, their budget

process is basically the same. The budget
authorization is lodged with their respective
governing boards and budget review by the
DBM and /or GCG.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-13

 Objects of

 Personnel Services (PS)

 Maintenance and Other Operating

Expenses (MOOE)

 Financial Expenses

 Capital Outlay

Session 1.1: Introduction to Audit of Government Expenditures 1.1-14

 Modes of
1. Cash (through cash advance)
2. Checks (MDS or Commercial Check)
3. List of Due and Demandable Accounts Payable -
Advice to Debit Accounts (LDDAP-ADA)
4. Tax Remittance Advice
5. Working Fund (CDC)
6. Direct payment method

Session 1.1: Introduction to Audit of Government Expenditures 1.1-15

 Payment through Cash

1. Petty Cash
2. Cash Advances:
 Regular Cash Advances
 Special Cash Advances

Session 1.1: Introduction to Audit of Government Expenditures 1.1-16

 Payment through Checks

All disbursements shall be made through

checks:
• Modified Disbursement System Checks, and
• Commercial Checks

Session 1.1: Introduction to Audit of Government Expenditures 1.1-17

 Other Modes of Disbursements

1. Advice to Debit Account (LDDAP-ADA)

2. Tax Remittance Advice (TRA)

3. Working Fund

4. Direct Payment Method

Session 1.1: Introduction to Audit of Government Expenditures 1.1-18

 Fundamental Principles

1. No money shall be paid out of any public

treasury or depository except in pursuance of an
appropriation law or other specific statutory
authority.
2. Government funds or property shall be spent or
used solely for public purposes.
3. Trust Funds shall be available and may be spent
only for the specific purpose for which the trust
was created or the funds received.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-19

 Fundamental Principles

4. Fiscal responsibility shall, to the greatest extent,

be shared by all those exercising authority over
the financial affairs, transactions, and operations
of the government agency.
5. Disbursements or disposition of government
funds or property shall invariably bear the
approval of the proper officials.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-20

 Fundamental Principles

6. Claims against government funds shall be

supported with complete documentation
7. All laws and regulations applicable to financial
transactions shall be faithfully adhered to
8. Generally accepted principles and practices of
accounting as well as of sound management
and fiscal administration shall be observed,
provided that they do not contravene existing
laws and regulations.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-21

 Basic Requirements

Existence of a lawful and sufficient appropriation certified

as available by the proper officer

Legality of transaction and conformity with applicable laws,

rules and regulations

Approval of the expense by the head of the agency, or

government corporation or authorized representative

Submission of proper evidence to support the claim

Session 1.1: Introduction to Audit of Government Expenditures 1.1-22

 Preventions of IUEEU

COA Circular 2012-003

dated October 29, 2012

“Updated Guidelines for the Prevention

and Disallowance of Irregular,
Unnecessary, Excessive, Extravagant and
Unconscionable Expenditures”

Session 1.1: Introduction to Audit of Government Expenditures 1.1-23

 Irregular Expenditures

Signifies an expenditure
incurred without
adhering to established
rules, regulations,
procedural guidelines,
policies, principles or
practices that have
gained recognition in
laws.

Session 1.1: Introduction to Audit of Government Expenditures 1.1-24

Illegal Expenditures
Expenditures made without legal basis

Session 1.1: Introduction to Audit of Government Expenditures 1.1-25

 Unnecessary Expenditures

 Not supportive of the

implementation of the
objectives and mission of
the agency relative to the
nature of its operation.

 Not essential or that

which can be dispensed
with without loss or
damage to property

Session 1.1: Introduction to Audit of Government Expenditures 1.1-26

 Excessive Expenditures

 Unreasonable expenses
incurred at an
immoderate quantity and
exorbitant price

 Expenses which exceed

what is usual or proper

Session 1.1: Introduction to Audit of Government Expenditures 1.1-27

 Extravagant Expenditures

 Incurred without
restraint, judiciousness
and economy.

 Exceeds the bounds of

propriety

Session 1.1: Introduction to Audit of Government Expenditures 1.1-28

 Unconscionable Expenditures

 Unreasonable and
immoderate and which
no man in his right sense
would make, nor a fair
and honest man would
accept as reasonable

 Incurred in violation of
ethical and moral
standards

Session 1.1: Introduction to Audit of Government Expenditures 1.1-29

Thank You!

Session 1.1: Introduction to Audit of Government Expenditures 1.1-30

Professional and Institutional Development Sector
Professional Development Office
Commonwealth Avenue, Quezon City
Session 2.1
Audit on Personnel Services

Session 2.1: Apply the Related Laws, Rules and Regulations on 2.1-
Personnel Services – Salaries and Wages 32
 Basic Concepts
Salaries and Wages (Regular) – Pay proper for
services rendered of government employees
occupying regular plantilla position.
Salaries and Wages (Casual/Contractual) – Pay
proper for services rendered by employees
contracted/hired to perform regular agency
functions an services which cannot be provided
by the regular or permanent staff of the agency.

Session 2.1: Apply the Related Laws, Rules and Regulations on 2.1-
Personnel Services – Salaries and Wages 33
 Basic Concepts (Cont.)

Personal Economic Relief Allowance (PERA) –

Allowance granted to government personnel occupying
regular, contractual or casual positions, appointive or
elective, rendering service on full time basis and whose
positions are covered by R.A. 6758 as amended.
Representation /Transportation Allowance (RATA) –
Monthly allowance granted to authorized officials and
employees in the actual performance of their
respective functions both commutable and
reimbursable.
Session 2.1: Apply the Related Laws, Rules and Regulations on 2.1-
Personnel Services – Salaries and Wages 34
 Basic Concepts (Cont.)

Clothing/Uniform Allowance – The amount

granted to authorized government
officials/employees for the upkeep/replacement of
clothing/uniform paid in cash or in kind.

Session 2.1: Apply the Related Laws, Rules and Regulations on 2.1-
Personnel Services – Salaries and Wages 35
 Basic Concepts (Cont.)

Honoraria – The payment given to professionals

for services in recognition of their expertise, broad
and superior knowledge in specific fields and
special projects. This also include payments to
lecturers, resource persons, coordinators and
facilitators in seminar, training programs and other
similar activities in training institutions including
those who render services beyond their regular
workload.

Session 2.1: Apply the Related Laws, Rules and Regulations on 2.1-
Personnel Services – Salaries and Wages 36
 Basic Concepts (Cont.)

Hazard Pay – Payment to government

officials/employees assigned in
difficult/dangerous/strife-torn/embattled areas
as certified by appropriate government body and
to those whose lives are directly exposed to
work conditions which may cause them
injury/sickness/death/harmful change.

Session 2.1: Apply the Related Laws, Rules and Regulations on 2.1-
Personnel Services – Salaries and Wages 37
 Personnel Benefits
also include:

 Salary Increases
 Step Increment
 Incentive & Service Fees
 Commutation of Leaves

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-38
 Personnel Benefit
Contribution
 Retirement and Life Insurance
Premiums
 Pag-ibig Contribution
 Philhealth Contribution
 Employees Compensation Insurance
Premium
 Provident / Welfare Fund Contribution
Session 2.1: Apply the Related Laws, Rules and Regulations on
Personnel Services – Salaries and Wages 2.1-39
Existence of Appropriation

Personnel Services – GAA for National,

Appropriation Ordinance for Local, COB
for Corporate

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-40
 Legality of Transactions

1. Existence of a legally created position

with fixed compensation or emolument
attached to the position **
2. Issuance of valid appointment
3. Rendition of service being paid
4. Payment to the right person

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-41
 Supporting Documents - 1ST
salary
1. Certified true copy of duly approved Appointment;
2. Assignment Order, if applicable
3. Certified true copy of Oath of Office
4. Certificate of Assumption
5. Statement of Assets, Liabilities and Net Worth
6. Approved DTR
7. BIR Forms 1902 and 2305
8. Payroll Information on New Employee (PINE)(for
agencies with computerized payroll)
9. Authority from the claimant and identification
documents, if claimed by other persons.
Session 2.1: Apply the Related Laws, Rules and Regulations on
Personnel Services – Salaries and Wages 2.1-42
 Supporting Documents -
Casual/Contractual salary
1. Certified true copy of the pertinent
contract/appointment/job order;
2. Certification by the LCE that the employment/hiring
is within the PS limitation prescribed under Sec. 325(a)
of RA No. 7160
3. Certification by LCE/Personnel Officer that the
services cannot be provided by regular/permanent
personnel
4. Accomplishment Report
5. Approved DTR
Session 2.1: Apply the Related Laws, Rules and Regulations on
Personnel Services – Salaries and Wages 2.1-43
 Supporting Documents -
last salary
1. Clearance from money, property and
legal accountabilities; and

2. Approved DTR

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-44
 Supporting Documents

COA Circular 2012-001 dated June 14,

2012

“Prescribing the Revised Guidelines and

Documentary Requirements for
Common Government Transactions”

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-45
 P E R A

E – GAA, Appropriation Ordinance

L – DBM BC 2009-003 dated Aug. 18, 2009
A – Approval on the DV, payroll
S – Section 4.1 of COA Circular 2012-001

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-46
 R A T A

E – GAA, Appropriation Ordinance

L – DBM NBC 548 dated May 15, 2009
Section 54, GAA 2017
A – Approval on the DV
S – Section 5.2 of COA Circular 2012-001

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-47
 Required documents for RATA

For Individual Claims

1. Copy of Office Order/Appointment (l"
payment)
2. Certificate of Assumption (I" payment)
3. Certification that the official/employee
did not use government vehicle and is
not assigned any government vehicle

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-48
 RATA

4. Certificate or evidence of service

rendered or approved DTR;

5. Certification by the LCE that the

revised RATA rates is within the PS
limit prescribed under Sec. 325(a) of
RA No. 7160 (for initial claim)

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-49
 RATA
For General Claims

1. RATAPayroll;
2. Payroll Register (hard and soft copy);
3. Letter to Bank to credit employees'
account of RATA claims, if applicable;
4. Validated deposit slip, if applicable

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-50
 Clothing Allowance

E – GAA, Appropriation Ordinance,

Available PS of the Agency

L – DBM BC 2012-1 dated February 23,

2012 Section 49, 2017 GAA

A – Approval on the DV
S – Section 5.3 of COA Circular 2012-001
Session 2.1: Apply the Related Laws, Rules and Regulations on
Personnel Services – Salaries and Wages 2.1-51
 Clothing Allowance-Newly Hired

For Individual Claims

1. Certified true copy of approved appointment of new
employees
2. Certificate of Assumption of new employees
3. Certificate of non-payment from previous agency,
for transferees
General Claims
1. Clothing/Uniform Allowance Payroll
2. Payroll Register (hard and soft copy)
3. Letter to the Bank to credit employees' account of
their salaries or other claims
4. Validated deposit slips
Session 2.1: Apply the Related Laws, Rules and Regulations on
Personnel Services – Salaries and Wages 2.1-52
 Honoraria

a. Government Procurement – BAC & TWG

b. Teaching personnel
c. Lecturer/Coordinator
d. Governing Boards of Collegial Bodies
e. Special Projects
f. Science and Technology Activities

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-53
 Teaching Personnel &
Lecturer/Coordinator

E – GAA, Appropriation Ordinance, Available PS of

the Agency

L – DBM BC 2007-001 dated April 23, 2007

A – Approval on the DV
S – Section 5.7.2 & 5.7.4 of COA Circular 2012-001
Session 2.1: Apply the Related Laws, Rules and Regulations on
Personnel Services – Salaries and Wages 2.1-54
 Hazard Duty Pay

E – GAA, COB, Appropriation Ordinance/Savings

L – DBM BC 2005-4 dated July 13, 2005 Section 54,
2015 GAA GP
A – Approval on the DV
S – Section 5.7.8 of COA Circular 2012-001

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-55
 Hazard Pay Computation

Period of Monthly
Assignments Rates

1 to 7 Days ₱400.00

8 to 14 Days ₱500.00

15 or more ₱600.00
Days

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-56
 PHWS Hazard Pay
FOR PHWS HOLDING SALARY GRADE 19 POSITION:

ACTUAL
HIGH RISK LOW RISK
EXPOSURE
12 or more days 25% of monthly 14% of monthly
basic salary basic salary
6 to 11 days 14% of monthly 8% of monthly basic
basic salary salary
Less than 6 days 8% of monthly 5% of monthly basic
basic salary salary

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-57
 Magna Carta Benefits (Cont.)

LEGAL BASIS:
RA 7305 - Magna Carta for PHWs
RA 9433 - Magna Carta for PSWs
RA 8439 - Magna Carta for Scientists,
Engineers, Researchers, and
other S&T Personnel

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-58
 Public Health Workers

“All persons employed in all health related

establishments owned and operated by the
government or its political subdivisions with
original charters and shall include medical,
allied health professional, administrative
and support personnel employed regardless
of their employment status.”

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-59
 Magna Carta Benefits -
PSWS

RA 9433 dated April 11, 2007 and its IRR

 Covers all registered social workers

employed in government service

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-60
 Magna Carta Benefits –
PSWS (Cont.)

 Hazard Pay
 Subsistence /Transportation Allowance
 Housing and Living Quarters Allowance
 Longevity Pay
 Clothing Allowance
 Compensation from injuries

Session 2.1: Apply the Related Laws, Rules and Regulations on

Personnel Services – Salaries and Wages 2.1-61
Session 1.1: Introduction to Audit of Government Expenditures 1.1-62
Professional and Institutional Development Sector
Professional Development Office
Commonwealth Avenue, Quezon City
Session 3.1
Audit of Other MOOE

Session 3.3: Audit of Other MOOE 1.1-

 Classifications of Other
Expenses under MOOE
• Training and Scholarship Expenses

• Utility Expenses

• Communication Expenses

• Awards, Rewards and Prizes

• Survey, Research, Exploration and Development Expenses

• Demolition/Relocation and Desilting/ Dredging Expenses

Session 3.3: Audit of Other MOOE 1.1-

65
 Classifications of Other
Expenses under MOOE (cont.)

• Generation, Transmission and Distribution Expenses

• Confidential, Intelligence and Extraordinary Expenses

• Professional Services

• General Services

• Repairs and Maintenance

• Financial Assistance/Subsidy

Session 3.3: Audit of Other MOOE 1.1-

66
 Classifications of Other
Expenses under MOOE (cont.)

• Taxes, Insurance Premiums and Other Fees

• Labor and Wages

• Other Maintenance and Operating Expenses

Session 3.3: Audit of Other MOOE 1.1-

67
 Training Expenses
Documentary Requirements

Budget estimates approved by the Head of Agency

Schedule of training approved by the Head of the
Agency

Same requirements under procurement depending on

the nature of expense and the mode of procurement
adopted

Session 3.3: Audit of Other MOOE 1.1-

69
 Water/Electricity/Telephone/
Internet Subscription Expenses

• WATER EXPENSES – Refers to the cost of water consumed in

government operating projects.

• ELECTRICITY EXPENSES – Refers to the cost of electricity

consumed in government operations/projects.

• TELEPHONE EXPENSES – The cost of transmitting messages

thru telephone lines( (mobile or landlines), faxes, telex and the
like whether prepaid or postpaid.

• INTERNET SUBSCRIPTION EXPENSES – The cost of using

internet services in government operations.

Session 3.3: Audit of Other MOOE 1.1-70

 Consultancy Services
This includes the cost of services rendered by
consultants contracted to perform particular outputs or
services primarily advisory in nature and requiring
highly specialized or technical expertise which cannot
be provided by the regular staff of the agency.

Session 3.3: Audit of Other MOOE 1.1-71

 Advance Payment
A single advance payment not exceed 50 % of the
contract amount shall be allowed for contracts entered
into by a procuring entity for the following services
where requirement of down payment is a standard
industry practice:

a. Hotel and restaurant services

b. Use of conference/seminar and exhibit areas
c. Lease of office space.

Session 3.3: Audit of Other MOOE 1.1-74

 Procedures: Lease of Real
Property

1. The BAC shall invite at least three (3) prospective

Lessors to submit sealed price quotations. On a
specified date, submitted price quotations shall be
opened to determine the Lowest Calculated
Quotation. Receipt of at least one (1) quotation is
sufficient to proceed with the evaluation thereof.

Session 3.3: Audit of Other MOOE 1.1-75

 Procedures: Lease of Real
Property (cont.)

2. The real property being offered by the Lessor with

the Single or Lowest Calculated Quotation shall be
rated in accordance with the technical specifications
and the reasonableness of its price quotation shall
be determined in accordance with the methodology
prescribed in Appendix B.

Session 3.3: Audit of Other MOOE 1.1-76

 Procedures: Lease of Real
Property (cont.)

3. Upon determination of the responsiveness and

reasonableness of the quotation, the BAC shall
recommend to the HOPE the award of contract in
favor of the Lessor with the Single or Lowest
Calculated and Responsive Quotation. Award of
contract shall be made in accordance with Section
IV(L) of this Guidelines.

Session 3.3: Audit of Other MOOE 1.1-77

 Financial Expenses
GENERAL GUIDELINE:

In line with entering into various transactions with local

and international financing institutions, agencies
incurred bank charges, commitment fees, documentary
stamp tax, interest expense and other related financial
charges.

Session 3.3: Audit of Other MOOE 1.1-79

 Fidelity Bond Premiums

It is the amount of premiums paid by the agency

for the fidelity bonds of accountable officers.

Session 3.3: Audit of Other MOOE 1.1-80

 Water/Electricity/Telephone/
Internet Subscription Expenses

DOCUMENTARY REQUIREMENTS:

I. For Utility Expenses:

a. Statement of Account/Bill
b. Invoice/Official Receipt or machine
validated statement of account/bill

Session 3.3: Audit of Other MOOE 1.1-81

 Water/Electricity/Telephone/
Internet Subscription Expenses
(cont.)

DOCUMENTARY REQUIREMENTS:
II. For Telephone/Communication Services:
a. Statement of Account/Bill
b. Invoice/Official Receipt or machine validated
statement of account
c. Certification by the Agency head or his authorized
representative that all National Direct Dial, National
Assisted Calls and International Operator Assisted
Calls are official calls.

Session 3.3: Audit of Other MOOE 1.1-82

 Extraordinary and
Miscellaneous Expenses
DOCUMENTARY REQUIREMENTS:
• Invoice Receipts for GOCCs/GFIs and LGUs
• Receipts and or other documents evidencing disbursement, if
there are available, or in lieu thereof, certification executed by
the official concerned that the expense sought to be
reimbursed have been incurred for any purposes contemplated
under the provisions of the GAA in relation to or by reasons of
his positions, in case of NGAs.
• Other supporting documents as are necessary depending on
the nature of expense charged.

Session 3.3: Audit of Other MOOE 1.1-83

 Contract Implementation
Guidelines for the Procurement of
Consulting Services

1. Advance Payment for Mobilization – The Government, as it

considers fair and reasonable, may allow advance payment to
the consultant in the amount which shall not exceed 15% of the
contract amount to cover the cost of mobilization, subject to the
posting of an irrevocable standby letter of credit issued by an
entity acceptable to the agency and of an amount equal to the
advance payment. The advance payment shall be repaid by
the Consultant by deducting from his progress payments such
sum as agreed upon during the contract negotiations until fully
liquidated within the duration of the contract.

Session 3.3: Audit of Other MOOE 1.1-84

 Contract Implementation
Guidelines for the Procurement of
Consulting Services (cont.)

2. Cost of Consultancy Services – All consultancy

contracts shall be fixed price contracts. Any
extension of contract time shall not involve .any
additional cost.

Session 3.3: Audit of Other MOOE 1.1-85

 Consultancy Services
(cont.)
ADDITIONAL DOCUMENTARY REQUIREMENTS:

1. Additional documents required to be submitted to the Auditor’s

Office within 5 days from the execution of the contract:
a. If not in the Terms of Reference, appropriate approved
documents indicating the expected outputs/deliverables
b. Copy of the Approved Manning Schedule indicating the
names and positions of the consultants and staff and the
extent of their participation in the project
c. Copy of the curriculum vitae of the consultants and staff

Session 3.3: Audit of Other MOOE 1.1-86

 Consultancy Services
(cont.)

2. Letter request for payment from the consultant

3. Approved Consultancy Progress/Final Reports, and
/or output required under the contract
4. Progress /Final billing
5. Contract of Infrastructure Projects subject to Project
Management Consultancy Services

Session 3.3: Audit of Other MOOE 1.1-87

 Revised Guidelines on the Extension of
Contracts for General Support Services

• These guidelines shall govern the extension of

ongoing contracts for general support services,
including but not limited to maintenance of equipment
and furniture, janitorial and security services.

• These guidelines shall not apply to contracts with

water, electricity, telecommunications, and internet
service providers.

Session 3.3: Audit of Other MOOE 1.1-92

 Revised Guidelines on the Extension of
Contracts for General Support Services
(cont.)

GENERAL CONDITIONS FOR EXTENSIONS:

• Procuring entities may extend the duration or effectivity of an
ongoing contract about to expire, under the following
conditions:
a. No contract extension must exceed one year
b. The original contract subject of extension was awarded in
accordance with the provisions of RA 9184 and its IRR.
c. The procuring entity concerned has substantially
undertaken the procurement activities required prior to the
award of the new contract under RA 9184 and its IRR

Session 3.3: Audit of Other MOOE 1.1-93

 Revised Guidelines on the Extension of
Contracts for General Support Services
(cont.)

d. The aforesaid contract extension is undertaken

due to circumstances beyond its control and the
procuring entity concerned cannot award a new
contract within a month after the expiration of the
term of the original contract.
e. The contemplated extension is merely an
emergency measure to maintain status quo in
the operations of the Procuring Entity and to
avoid interruption of service.

Session 3.3: Audit of Other MOOE 1.1-94

 Revised Guidelines on the Extension of
Contracts for General Support Services
(cont.)

f. The current service provider has not violated any of

the provisions of the original contract.
g. The terms and conditions of the original contract
shall not be changed, modified, except when
changes or modifications will redound to the
advantage of the government at no additional cost to
the procuring entity.

Session 3.3: Audit of Other MOOE 1.1-95

 Revised Guidelines on the Extension of
Contracts for General Support Services
(cont.)

PROCEDURAL REQUIREMENTS:
• All contract extensions shall be subject to the prior authority of
the Head of the Procuring Entity or his duly authorized
representative upon the recommendation of the Bids and
Award Committee (BAC)
• If the proposed contract extension exceeds 6 months, the Head
of the Procuring Entity, or his duly authorized representative
shall immediately report to the GPPB in writing of its intent to
extend beyond 6 months.

Session 3.3: Audit of Other MOOE 1.1-96

 Rent/Lease Expenses
ADDITIONAL DOCUMENTARY REQUIREMENTS:
1. Documents required to be submitted to the Auditor’s Office
within 5 days from execution of the contract:
A. For privately-owned office building:
a. Complete copy of the building floor plans indicating in
shaded colors the rentable space.
b. Copy of the Certificate of Occupancy of the building or
appropriate approved documents showing the date the
building was constructed or age of the building

Session 3.3: Audit of Other MOOE

1.1-97
 Rent/Lease Expenses (cont.)

B. For equipment rental/lease purchase contract

a. Agency Evaluation of equipment utilization
b. Pertinent data of area operation.
2. List of prevailing comparable property within vicinity
3. Vicinity map
4. Request for payment
5. Bill/invoices
6. Certificate of Occupancy (space building)

Session 3.3: Audit of Other MOOE 1.1-98

 Repair and Maintenance-
Transportation Expenses
ADDITIONAL DOCUMENTARY REQUIREMENTS:
1. Documents to be submitted within 5 days from the execution of
the contract:
a. Copy of the pre-repair and approved detailed plans by the
agency showing in sufficient detail the scope of work/extent
of repair to be done
b. Copy of the latest service bulletin, in case of aircraft
c. Report of waste materials
d. Copy of document indicating history of repair
2. Post-inspection reports
3. Warranty certificate
Session 3.3: Audit of Other MOOE
1.1-99
 Repair and Maintenance-
Transportation Expenses (cont.)

4. Request for payment

5. Bill/invoice
6. Certificate of acceptance
7. Pre-repair inspection reports
8. Such other documents peculiar to the contract
and/or to the mode of procurement and considered
necessary in the auditorial review and in the
technical evaluation thereof.

Session 3.3: Audit of Other MOOE

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100
 Documentary Requirements –
Training

• Budget estimates approved by the Head of

Agency
• Schedule of training approved by the Head
of Agency
• Same requirements under procurement
depending on the nature of expense and the
mode of procurement adopted.

Session 3.3: Audit of Other MOOE

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101
 Financial Expenses
DOCUMENTARY REQUIREMENTS:

1. Loan Agreements/Memoranda of Agreement

together with supporting documents
2. Statement of Account
3. Bank Debit Memos
4. Other supporting documents deemed necessary
depending on the nature of the transaction.

Session 3.3: Audit of Other MOOE

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102
Session 4.1
Audit of Traveling
EXPENDITURES

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103
 Allowable Travel Expense

TRAVEL EXPENSES
The amount authorized to cover hotel/lodging
rate, meals and incidental expenses excluding
transportation expenses going to and from the
destinations.

Session 3.1: Audit of Traveling Expenditures 1.1-

104
 Types of Travel
Expenses

- Local

- Foreign

Session 3.1: Audit of Traveling Expenditures 1.1-

105
 General Guidelines

Under Section 3 (a) of Executive Order No. 77

dated March 15, 2019, travels shall cover only
(1) those which are essential to the effective
performance of an official or employee’s
mandates or functions; (2) when it is required to
meet the needs of the department, agency,
bureaus or office or there is substantial benefit
to be derived by the State;

Session 3.1: Audit of Traveling Expenditures 1.1-

106
 General Guidelines
(cont.)

(3) The presence of the official or employee is

critical to the outcome of the meeting,
conference, seminar, consultation or any official
activity to be attended; and (4) the projected
expenses are not excessive or involve minimum
expenditure.

Session 3.1: Audit of Traveling Expenditures 1.1-

107
 General Guidelines (cont.)

Sec. 3 (c) (EO 77) The following shall not be

issued authority for foreign travel and shall not
be entitled for government funding for such
trips:

1. Private Individuals;
2. Consultants of and/or those engaged by
contract of service by, government agencies,
except (a) on meritorious cases and (b) if
justified in writing submitted to approving
officials.
Session 3.1: Audit of Traveling Expenditures 1.1-
108
 General Guidelines (cont.)

3. Spouses or children of government officials,

except when diplomatic protocol or established
international practices provide otherwise.

Session 3.1: Audit of Traveling Expenditures 1.1-

109
 Allowable Travel Expense
Local Travel
The travel expenses shall be in the amount depending on
the Region (as Clustered) of destination which shall be
apportioned as follows:

For LOCAL TRAVELs made beyond 50km radius

- During date of arrival and succeeding days: (100%)

a. fifty percent (50%) for hotel/lodging

b. thirty percent (30%) for meals
c. twenty percent (20%) for incidental expenses
Session 3.1: Audit of Traveling Expenditures 1.1-
110
 Allowable Travel Expense
Local Travel

- During date of departure to Official station: (50%)

a. thirty percent (30%) for meals

b. twenty percent (20%) for incidental expenses

Session 3.1: Audit of Traveling Expenditures 1.1-

111
 Allowable Travel Expense

Reimbursement of accommodation expenses in excess

of the accommodation component of DTE may be
allowed , but in no case shall the difference exceed
100% of the said component in the prescribed rate; and

a. Submission of Certification by agency head that the

expenses is absolutely necessary in the
performance of the assignment; and
b. Presentation of Bills and receipts.

Session 3.1: Audit of Traveling Expenditures 1.1-

112
 Allowable Travel
Expenses
1. When government vehicle is used for the travel, the
officials or employees shall not be entitled to the
transportation allowance.

2. No reimbursement of cost of gasoline and oil shall

be allowed where a private vehicle is used but
reimbursement of the equivalent cost of customary
mode of transportation shall be allowed

Session 3.1: Audit of Traveling Expenditures 1.1-

113
 Allowable Travel Expense
(cont.)
LOCAL TRAVEL WITHIN 50km RADIUS:
Claims for payment of travel expenses for assignment to
places within the fifty (50) kilometer radius maybe
allowed for the amount not exceeding the prescribed
rate if the employee stayed in the place of assignment
and did not commute daily from/to place of assignment
and residence/official station during such period of
travel, provided that claim for accommodation
component shall be supported with hotel/lodging
bills/invoice.

Session 3.1: Audit of Traveling Expenditures 1.1-

114
 Allowable Travel Expense
(Cont.)
LOCAL TRAVEL WITHIN 50km RADIUS:

If they commute daily from the place of their assignment

to the place of their residence or permanent official
station, they shall be allowed:

1. actual fare at the prevailing rates of the authorized

mode of transportation from the permanent official
station to the destination or place of work and back;
and
2. Meals not exceeding 30% of the authorized DTE
meal component rate.
Session 3.1: Audit of Traveling Expenditures 1.1-
115
 Approval of Foreign Travel
(cont.)

• Regardless of the length of travel and the number of

delegates concerned, the approval from their
respective heads of agencies should be sought, such
as:

1. Office of the President;

2. Department Secretaries or their equivalent rank;
3. Heads of agencies under or attached to the OP;
4. Chief Executive Officers of GOCCs/GFIs; and
5. Secretary of DILG

Session 3.1: Audit of Traveling Expenditures

1.1-
116
 Allowable Travel
Expense Foreign Travel
Government personnel who travel abroad shall be entitled to the
Daily Subsistence Allowance (DSA) based on International Civil
Service Commission (ICSC) of the United Nations which can be
accessed at www.undp.org.ph or www.dfa.gov.ph. The DSA shall
be apportioned as follows unless otherwise stated in the UNDP
Index:

a. fifty percent (50%) for hotel/lodging

a. thirty percent (30%) for meals
b. twenty percent (20%) for incidental expenses

When the country of destination is not listed in the said Index, the
DSA for the nearest country shall be adopted.
Session 3.1: Audit of Traveling Expenditures 1.1-
117
 Reimbursement of
Actual Travel Expenses
For foreign travel-Subject to the approval of the
President, claims for reimbursement of actual travel
expenses in excess of the DSA authorized herein may
be allowed upon certification by the head of agency as
absolutely necessary in the performance of an
assignment and presentation of bills and receipts.
Certification or affidavit of loss shall not be considered
as appropriate replacement for the required hotel
room/lodging bills and receipts.

Session 3.1: Audit of Traveling Expenditures 1.1-

118
 Other Travel Expenses

1. Pre-Departure Expenses – P3,500

2. Clothing Allowance;

3. Reimbursement of Representation Expenses

4. Applicable insurance premiums

Session 3.1: Audit of Traveling Expenditures 1.1-

119
 Rendition of Account
Cash Advances
• Within 2 months after his return to the Philippines, in
the case of official travel abroad, or within thirty (30)
days of his return to his permanent official station in
the case of official local travel, every official or
employee shall render an account of the cash
advance received by him in accordance with existing
applicable rules and regulations.

Session 3.1: Audit of Traveling Expenditures 1.1-

120
 Docs. Req. – CA –
Foreign Travel
Documentary Requirements

• Office Order/Travel Order

• Duly approved itinerary of travel
• Certification from the accountant that the previous
cash advance has been liquidated and accounted for
in the books

Session 3.1: Audit of Traveling Expenditures 1.1-

121
 Docs. Req. – CA –
Foreign Travel (cont.)
• Letter of invitation of host/sponsoring country/agency/ organization
• For plane fare, quotations of three travel agencies or its equivalent
• Flight itinerary issued by airline/ticketing office/travel agency
• Copy of the United Nations Development Programme (UNDP) rate for
the daily subsistence allowance (DSA) for the country of destination for
the computation of DSA to be claimed
• Document to show the dollar to peso exchange rate at the date of grant
of cash advance
• Where applicable, authority from the OP claim representation expenses

Session 3.1: Audit of Traveling Expenditures 1.1-

122
 Docs. Req. – CA –
Foreign Travel (cont.)
IN CASE OF SEMINARS/TRAININGS:

• Invitation addressed to the agency inviting participants (issued

by the foreign country)
• Acceptance of the nominees as participants (issued by the
foreign country)
• Programme Agenda and Logistics Information
• Certification from the Accountant that the previous cash
advance has been liquidated and accounted for in the books

Session 3.1: Audit of Traveling Expenditures 1.1-

123
 Liq. Docs. – Local
Travel
DOCUMENTARY REQUIREMENTS:

• Paper/electronic plane, boat or bus tickets, boarding

pass, terminal fee
• Certificate of Appearance/Attendance
• Copy of previously approved itinerary of travel
• Revised or supplemental Office Order or any proof
supporting the change of schedule
• Revised itinerary of travel, if the previous approved
itinerary was not followed
Session 3.1: Audit of Traveling Expenditures 1.1-
124
 Liq. Docs. – Local
Travel (cont.)

• Certificate of Travel Completed

• Hotel room/Lodging bills with official receipts in the
case of official travels within 50-kilometer radius area,
if the travel allowances being claimed include the
hotel room/lodging rate

Session 3.1: Audit of Traveling Expenditures 1.1-

125
 Liq. Docs. – Local
Travel (cont.)
• Certification by the Head of Agency as to the
absolute necessity of the expenses together with the
corresponding bills or receipts, if the expenses
incurred for official travel exceeded the prescribed
rate per day
• Liquidation Report
• Reimbursement Expense Receipt (RER)/
Certification for Expenses not Requiring Receipts.
• OR in case of refund of excess cash advance

Session 3.1: Audit of Traveling Expenditures 1.1-

126
 Liquidation – Local Travel

• Where the travel is cancelled, the amount

paid in advance shall be refunded in full.
Where the trip is cut short or terminated in
advance of the itinerary, the excess payment
shall be refunded immediately upon
cancellation or termination of the trip.

Session 3.1: Audit of Traveling Expenditures 1.1-

127
 Liquidation – Local Travel
(cont.)

When a trip exceeds the approved itinerary, the

additional travel expenses due shall be paid
upon submission of the following:

• A written justification satisfactory to the head

of agency

• Additional itinerary for the extension of the

trip

Session 3.1: Audit of Traveling Expenditures 1.1-

128
 Liq. Docs. –
Foreign Travel

DOCUMENTARY REQUIREMENTS:

• Paper/electronic plane tickets, boarding pass, boat or

bus ticket
• Certificate of Appearance/Attendance for
training/Seminar participation
• Bills/receipts for non-consumable representation
expenses approved by the President

Session 3.1: Audit of Traveling Expenditures 1.1-

129
 Liq. Docs. –
Foreign Travel (cont.)

For reimbursement of actual travel expenses in excess

of the prescribed rate:

• Approval by the President

• Certification from the Head of Agency that it is
absolutely necessary
• Hotel room bills with official receipts

Session 3.1: Audit of Traveling Expenditures 1.1-

130
 Liq. Docs. –
Foreign Travel (cont.)

• Revised Itinerary of Travel, if applicable

• Narrative Report on trip undertaken/Report
on Participation
• OR in case of refund of excess cash advance
• Certificate of Travel Completed
• Liquidation Report

Session 3.1: Audit of Traveling Expenditures 1.1-

131
Session 3.3: Audit of Other MOOE
1.1-
132
Professional and Institutional Development Sector
Professional Development Office
Commonwealth Avenue, Quezon City
PROCUREMENT

1.1-
134
 Modes of Procurement
1. Section 10 of RA 9184 provides that all
procurement shall be done through
competitive bidding except as provided for in
Article XVI of the law;
2. Article XVI provides for the alternative
modes of procurement which are:
a. Limited Source Bidding
b. Direct Contracting
c. Repeat Order
d. Shopping
e. Negotiated Procurement
Session 3.2: Audit of Inventories 1.1-
135
 General Procedures/
Steps on Procurement
1. Procurement Planning and the Preparation of the
Annual Procurement Plan (APP);
2. Requisitioning thru the preparation of the Requisition
and Issue Slip
3. Approval of Requisition;
4. Preparation and Approval of Purchase Request
5. Preparation and Approval of Purchase Order(Goods)
6. Delivery, Inspection and Acceptance of the Items;
7. Preparation of Obligation Request and Status(ORS);
8. Payment of the Items delivered
Session 3.2: Audit of Inventories 1.1-
136
 Negotiated Procurement
• Two Failed Biddings
• Emergency cases

• Take-over of Contracts
• Highly Technical Consultants

• Defense Cooperation Agreement

• Small Value Procurement

• Community Participation
• United Nations Agencies
Session 3.2: Audit of Inventories 1.1-
137
 Negotiated Procurement
• Adjacent or Contiguous

• NGO Participation (GPPB Resolution No. 12-

2007 dated 29 June2007)

• Agency-to-Agency

• Procurement Agent

• Lease of Real Property

Session 3.2: Audit of Inventories 1.1-

138
 Splitting
• Splitting of Government Contracts is not allowed.
Splitting of Government Contracts means the
division or breaking up of GoP contracts into smaller
quantities and amounts, or dividing contract
implementation into artificial phases or sub-contracts
for the purpose of evading or circumventing the
requirements of law and this IRR ,particularly the
necessity of competitive bidding and the
requirements for the alternative methods of
procurement.

Session 3.2: Audit of Inventories 1.1-

139
 Guidelines in the Preparation
and Submission of Purchase
Order
• A copy of any letter or purchase order, irrespective of
amount, and all supporting documents thereto, shall
be submitted to the unit or agency Auditor concerned
within five (5) days from issuance. The Auditor
concerned shall, within five (5) days following his
receipt thereof, inform management in writing of any
defect and/or deficiencies found in audit. (COA Circular
2009-001)

Session 3.2: Audit of Inventories 1.1-

140
 Guidelines in the Preparation
and Submission of Purchase
Order (cont.)
• Statement of Delivery Period – The requisitioner shall
state with definiteness and certainty the period of delivery
desired so as not to leave doubt when the supplies are
needed. Statements of delivery period such as “immediate
delivery”, “as soon as possible”, other words and phrases
having similar imports or without stating a particular period
shall be understood to mean seven (7) calendar days after
receipt by the supplier or contractor of the purchase order
or contract.
(COA Circular No. 92-386)

Session 3.2: Audit of Inventories 1.1-

141
 Shopping
A. When there is an unforeseen contingency requiring
immediate purchase; Provided, that the amount shall
not exceed the thresholds prescribed in Annex H of
the IRR.

B. Procurement of ordinary or regular office supplies

and equipment not available in the DBM-PS,
Provided, that the amount shall not exceed the
thresholds prescribed in Annex H of the IRR.

Session 3.2: Audit of Inventories 1.1-

142
 Procedures for Shopping
(Immediate Purchase)
1. The End-User unit or the duly authorized official or personnel shall
submit a purchase request to the BAC indicating the urgency to
address an identified need of the Procuring Entity and the
unforeseen contingency that caused its necessity.
2. The BAC shall immediately prepare the RFQ, indicating the
specifications, quantity, ABC, and other terms and conditions of the
contract.
3. The RFQ may be sent directly to the supplier of known technical,
legal and financial qualifications. Due to the attendant
circumstances and the urgency of the procurement, the supplier
shall immediately respond to the RFQ and signify its technical, legal
and financial capability to supply and deliver the goods to be
procured. Posting of the RFQ may be dispensed with.
Session 3.2: Audit of Inventories 1.1-
143
 Procedures for Shopping
(Immediate Purchase) (cont.)
4. The BAC shall immediately validate the technical, legal and
financial capability of the supplier to supply and deliver the
goods by requiring the submission of relevant documents or
through other verifiable means to prove the capability of the
Supplier.

5. Upon confirmation and ascertainment of such capability, the

BAC shall recommend to the HOPE the award of contract in
favor of the supplier with the Single or Lowest Calculated and
Responsive Quotation. In case of approval, the HOPE shall
immediately enter into a contract with the said supplier. (Annex
H, 2016 Revised IRR, RA 9184)

Session 3.2: Audit of Inventories 1.1-

144
 Shopping – for regular office supplies
and equipment not available in dbm – ps

1. The End-User submit a purchase request to the BAC

relative to goods procured through Shopping.

2. The BAC shall prepare the RFQ;

3. RFQs posted for a period of at least 3 CDs in

PhilGEPS, website of the PE, if available, and at any
conspicuous place for those with ABC above P50K.

4. The BAC sends the RFQs to at least 3 suppliers of

known qualifications, and at least 3 price quotations must
be obtained.

Session 3.2: Audit of Inventories 1.1-

145
 Shopping – for regular office
supplies/equipt not available in dbm – ps
5. Deadline for submission may be extended thrice, if
none or less than the required number of quotations are
received.
6. BAC prepares an Abstract of Quotations on those who
responded to the RFQ, their quotations, and the lowest
calculated quotation.
7. BAC validates the technical, legal and financial
capability of the supplier;
6. BAC recommends to HOPE the award of contract for
the Lowest Calculated and Responsive Quotation. In
case of approval, HOPE enters into a contract with the
supplier.
Session 3.2: Audit of Inventories 1.1-
146
 Procedural Guidelines for
Small Value Procurement

1. The end-user submits to the BAC request for SVP.

2. The BAC prepares and send RFQ/RFPs to at least 3
suppliers, contractors or consultants of known
qualifications.
3. If ABC is more than P50,000, post RFQs for a
period of three (3) calendar days in the PhilGEPS
website, website of the Procuring Entity, if available,
and at any conspicuous place reserved for this
purpose in the premises of the Procuring Entity.

Session 3.2: Audit of Inventories 1.1-

147
 Procedural Guidelines for
Small Value Procurement
(cont.)

4. Conduct pre-bid conference at the discretion of the BAC.

5. After the deadline for submission of quotations/proposals,

prepares an Abstract of Quotations/Ratings setting forth
the names of those who responded to the RFQ/RFP,
their corresponding price quotations

6. The BAC recommend to the HOPE the award of contract

in favor of the supplier or contractor with the Single or
Lowest Calculated and Responsive Quotation.

Session 3.2: Audit of Inventories 1.1-

148
 Repeat Order
Repeat Order is the method of procurement of goods
from previous winning bidder, whenever there is the
need to replenish goods subject to certain conditions.

Session 3.2: Audit of Inventories 1.1-

149
 Additional Documentary
Requirements for Repeat Order
1. Specific requirements to be submitted within five
working days from the execution of the contract as
required under COA Circular No. 2009-001 dated
February 12, 2009:

2. Copy of the original contract used as basis for

repeat order indicating that the original contract was
awarded through public bidding

3. Certification from the Purchasing Department/

Office that the supplier has complied with' all the
requirements under the original contract

Session 3.2: Audit of Inventories 1.1-

150
 Documentary Requirements
for Shopping
1. Price quotations from at least 3 bonafide and
reputable manufacturers/ suppliers/ distributors
2. Abstract of quotations
( Sec. 9.2.4, COA Circ. 2012-001)
3. Resolution recommending the Single/Lowest
Calculated and Responsive Quotation.
(In view of the procedures for shopping under Annex H of the 2016
Revised IRR of RA 9184)

Session 3.2: Audit of Inventories 1.1-

151
 Additional Documentary
Requirements for Immediate
Purchase
1. Purchase request to the BAC indicating the urgency
to address an identified need of the Procuring Entity
and the unforeseen contingency that caused its
necessity
2. RFQ, indicating the specifications, quantity, ABC
and other terms and conditions sent directly to
supplier of known qualification.
3. Resolution recommending the Single/Lowest
Calculated and Responsive Quotation
(In view of the procedures under Annex H, 2016 Revised IRR, RA 9184)

Session 3.2: Audit of Inventories 1.1-

152
 Documentary Requirements
for Small Value Procurement

1. Price quotations/bids/final offer from at least three

invited suppliers;
2. Abstract of submitted price quotations;
3. BAC Resolution recommending award of contract to
the Lowest Calculated Responsive Bid (LCRB).;
(Note: These must be submitted to the auditor within five
working days from execution of the contract.)

4. Letter / invitation to submit proposals.

Session 3.2: Audit of Inventories 1.1-

153
 Additional Documentary
Requirements – Goods
• Cert. of exclusive distributorship, if applicable
• Sample brochures/photographs, if applicable
• Original Dealer’s/supplier’s invoice showing the
quantity, description of the articles, unit and total
value.
• Result of test analysis
• Tax receipts from BOC, BIR indicating the exact
specification and /or serial no. of the equipment
procured as proof of payment of all taxes and duties

Session 3.2: Audit of Inventories 1.1-

154
 Additional Documentary
Requirements – Goods (cont.)

• Request for purchase of supplies and

materials, and equipment duly approved by
the proper authorities.
• For drugs and medicine:
• Cert. of product reg. from FDA
• Cert. of good manufacturing practice
from FDA

Session 3.2: Audit of Inventories 1.1-

155
 Additional Documentary
Requirements – Goods (cont.)

• Batch release cert. from FDA

• Cert. of authority from manufacturer, if dealer.
• If the supplier is not a manufacturer , cert. from the
manufacturer that the supplier is an authorized
distributor/dealer of the products/items
• Such other documents peculiar to the contract
and/or to the mode of procurement and considered
necessary in the auditorial review, and in the
technical evaluation thereof.

Session 3.2: Audit of Inventories 1.1-

156
 Major Types of Capital
Outlay
• Land
• Land improvements
• Infrastructure Assets
• Buildings and Other Structurees
• Machinery &Equipment
• Transportation Equipment
• Furniture, Fixtures & Books
• Leased Assets
• Leased Assets Improvements
• Heritage Assets
• Other PPE (Vol. III, GAM)

Session 4.1: Audit of Capital Outlay 1.1-

157
 Release of Retention Money

• The total retention money shall be due for release

upon final acceptance of the work. The
contractor may, however, request the substitution of
the retention money for each progress billing with
irrevocable standby letters of credit
acceptable to the Government, provided
that the project is on schedule and is
satisfactorily undertaken

Session 4.1: Audit of Capital Outlay 1.1-

158
 Variation Order
May be adopted for:

• Increase/decrease in quantities

• New work items not included in the

original contract

• Variation Order does not exceed 10% of

the original project cost
Session 4.1: Audit of Capital Outlay 1.1-159
 Liquidated Damages
• Where the contractor refuses or fails to
satisfactorily complete the work within the
specified contract time, plus any extension time
duly granted and is hereby in default under the
contract, the contractor shall pay the procuring
entity for liquidated damages, and not by way of
penalty, an amount as provided in the conditions
of the contract, equal to at least 1/10 of one
percent of the cost of the unperformed portion of
the works for every day of delay.

Session 4.1: Audit of Capital Outlay 1.1-160

 By Administration
The implementation of an infrastructure project is
carried out under the administration and
supervision of the concerned agency through its
personnel. The ff. conditions must be met:
1. Included in the APP.
2. Track record of completing similar project with
cost of least 50% of the project at hand.
3. Owns/Has access to necessary tools/
equipment.

Session 4.1: Audit of Capital Outlay 1.1-161

 Conditions & Requirements for the
Use of “By Administration” (cont.)

4. The project cost is P20 million or less

5. No contractor shall be used by the procuring
entity, directly or indirectly.
6. Procurement of tools and construction equipment
shall be subject to the rules on public bidding.
7. For projects funded by the National Government
and implemented by the Local Government, the
latter shall be post warranty security.

Session 4.1: Audit of Capital Outlay 1.1-162

 PAKYAW
Refers to a system of hiring a labor group for
the performance of a specific work and/or
service incidental to the implementation of an
infrastructure project by administration whereby
tools and materials are furnished by the
implementing agency.

Session 4.1: Audit of Capital Outlay 1.1-163

 Receipt, Inspection &
Acceptance of PPE

Receipt of items purchased by the agency

shall be inspected by the inspection
officer/committee before acceptance by
the Supply and/or Property Custodian.
Inspection and acceptance shall be made
using the IAR.

Session 4.1: Audit of Capital Outlay 1.1-164

 Luxury Vehicles
Administrative Order No. 233, s. 2008 prohibits
all government offices, including GOCCs, GFIs,
SUCs and LGUs from acquiring and/or using
luxury vehicles for their operations.

Session 4.1: Audit of Capital Outlay 1.1-165

 Process of
Competitive Bidding
(1) Advertisement, (2) pre-bid conference,
(3) eligibility screening of prospective bidders,
(4)receipt and opening of bids, (5) evaluation of
bids, (6) post-qualification and (7) award of
contract.

Session 3.2: Audit of Inventories 1.1-166

 Pre – Procurement
Conference
• Prior to the advertisement or to the issuance of the
invitation to bid on procurements undertaken through
a public bidding.
• Not be required for small procurements: procurement
of goods costing P2M and below; infrastructure
projects costing P5M and below, and consulting
services, P1M and below (Section 20.2, 2016
Revised IRR, RA 9184)

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 Advertising & Contents
of Invitation to Bid
In line with the principle of transparency and
competitiveness, all Invitations to Bids for contracts
under competitive bidding shall be advertised by the
Procuring Entity in such manner and for such length of
time as may be necessary under the circumstances in
order to ensure the widest dissemination thereof, such
as, but not limited to, posting in the Procuring Entity’s
premises, in newspaper of general circulation, the G-
EPS and the website of the Procuring Entity, if possible.

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 Advertisement in Newspaper
of General Circulation
• Advertisement of the Invitation to Bid in a
news paper of general nationwide circulation
shall not be required for contracts to be bid
with an approved budget of P10M and below
for the procurement of goods, P15M and
below for the procurement of infrastructure
projects and P5M and below for the
procurement of consulting services.

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 Eligibility Requirements for the
Procurement of Goods and
Infrastructure Projects

The BAC, or, under special circumstances specified in

the IRR, the duly designated organic office shall
determine the eligibility of prospective bidders for the
procurement of Goods and Infrastructure Projects,
based on the bidders’ compliance with eligibility
requirements within the period set forth in the Invitation
to Bid. The eligibility requirements shall provide for fair
and equal access to all prospective bidders.

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 Circumstances When Foreign
Bidders are Allowed in the
Procurement of Goods

• Goods are not available from local suppliers

• There is a need to prevent situations that defeat
competition or restrain trade subject to certain
conditions.
• Reciprocity Rule in the Procurement of Goods
• When provided for under any treaty or international
executive agreement

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 Receipt & Opening of
Biddings
• TWO-ENVELOPE SYSTEM
The first envelope shall contain the technical
information/documents;

The second envelope shall contain the financial

information/documents as specified in the PBDs

All bids shall be accompanied by Bid Security payable

to PE as guaranty that winning bidder shall enter into
contract w/in 10 days from receipt of contract

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 Bid Evaluation
The ABC shall be the upper limit or ceiling for the Bid
prices. Bid prices that exceed this ceiling shall be
disqualified outright from further participating in the
bidding. There shall be no lower limit to the amount of
the award. For the procurement of Goods and
Infrastructure projects, the BAC shall evaluate the
financial component of the bids. The bids that passed
the preliminary examination shall be ranked from lowest
to highest in terms of their corresponding calculated
prices. The bid with the lowest calculated price shall be
referred to as the Lowest Calculated Bid. ( Secs. 31, 32,
Art. IX, RA 9184.
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 Post Qualification
Post qualification is the stage where the bidder with
Lowest Calculated Bid, in the case of Goods and
Infrastructure Projects undergoes verification whether
he has passed all the requirements and conditions as
specified in the bidding documents. If the bidder with
Lowest Calculated Bid passes all the criteria for post
qualification, his bid shall be considered the Lowest
Calculated Responsive Bid., In all cases, the contract
shall be awarded only to the bidder with the Lowest
Calculated Responsive Bid. ( Sec. 34, Art. 10, RA 9184)

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 Award of Contract
Within a period not exceeding 15 calendar days from
the determination and declaration by the BAC of the
Lowest Calculated Responsive Bid , and the
recommendation of the award, the Head of the
Procuring Entity or his duly authorized representative
shall approve or disapprove the said recommendation.
In case of approval, the Head of the Procuring Entity or
his duly authorized representative shall immediately
issue the Notice of Award to the bidder with the Lowest
Calculated Responsive Bid. (Section 37, At. XI, RA
9184)

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 Contract – includes:

1. Contract Agreement;
2. Bidding Documents;
3. Winning bidder’s bid, including the Eligibility
requirements, Technical and Financial
Proposals, and all other documents/statements
submitted;
4. Performance Security;
5. Notice of Award of Contract; and
6. Other contract documents that may be required
in the Bidding Documents (Section 37.2.3,
2016 Revised IRR, RA 9184)
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 Basic Requirements for all Types
of Procurement through Public
Bidding

• Authenticated photocopy of the approved

APP and any amendment thereto
• Approved contract and its supporting
documents
• Copy of Advertisement of Invitation to
Bid/Request for Expression of Interest

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 Basic Requirements for all Types
of Procurement through Public
Bidding (cont.)

• Ranking of short listed bidders for consulting

services
• Post Qualification Evaluation Report
• Printout copy of posting of Notice of Award,
Notice to Proceed and Contract of award in
the PhilGEPS

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 Basic Requirements for all Types
of Procurement through Public
Bidding (cont.)
• Documentary requirements for infrastructure
projects, goods and for consulting services
• Minutes of Pre-procurement Conference for
projects costing above P5 million for
infrastructure, P2 million and above for
goods, and P1 million and above for
consulting services
• Bid Evaluation Report

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 Basic Requirements for all Types
of Procurement through Public
Bidding (cont.)

• For LGUs, authorization by local Sanggunian for the

Local Chief Executive to enter into contract
• Evidence of Invitation of three observers in all stages
of the procurement process
• Request for purchase or requisition of supplies,
materials and equipment duly approved by proper
authorities.

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 Add’l Requirements Common
to all Infrastructure Projects
1. Letter request from contractors for
advance/progress/final payment
2. Common to progress/final payments
• Statement of Work Accomplished or
Progress Billing;
• Inspection report by the agency’s
authorized engineer;
• Result of test analysis, if applicable
• Statement of time elapsed;
• Monthly certificate of payment

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 Additional Requirements
Common to all Infrastructure
Projects (cont.)
• Contractor’s affidavit on payt. of labor and
materials
• Pictures before, during and after construction
of items of work
• Photocopy of vouchers of all previous
payments
• Certificate of completion

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 Limited Source Bidding
• Procurement of highly specialized types of
goods/consulting services and only few suppliers
or consultants are available, such that resorting
to public bidding will not likely result in any add’l
participation from suppliers/ consultants; or
• Procurement of major plant components where it
is deemed advantageous to limit the bidding to
known qualified bidders in order to maintain
uniform quality and performance of the plant.

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 Additional Requirements –
Limited Source Bidding
1. Copy of direct invitation to bid
2. Abstract of bids showing the most
responsive and complying bidder from
among the other bidders
3. Winning bidders offer or proposal
4. Notice of award, bid security
5. Other documents considered necessary by
the auditor.

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 Direct Contracting
a. Procurement of goods of proprietary nature
which can be obtained only from the source;
b. Procurement of critical plant components
from a specific supplier is a condition
precedent to hold a contractor to guarantee
its project performance; or
c. Those sold by an exclusive dealer or
manufacturer which does not have sub-
dealers selling at lower prices and for which
no suitable substitute can be obtained

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 Additional Requirements –
Direct Contracting
• Letter to selected supplier to submit a price
quotation and conditions of sale
• Certificate of Exclusive Distributorship issued
by the principal
• BAC Certification for procurement of critical
components to maintain certain standards
• Agency authorized official Certification that
there are no sub-dealers selling at lower prices
and for which no substitute can be obtained

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Session 3.2: Audit of Inventories 1.1-
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